India-UK free trade agreement halves spirit tariffs, unlocks US$34 B trade boost 

INDIA – India and the United Kingdom have signed a landmark free trade agreement that significantly reduces tariffs on a range of goods, including a major cut in import duties on spirits.  

The deal is expected to boost bilateral trade and investment, marking a major milestone in post-Brexit economic diplomacy for the UK and economic expansion for India. 

The agreement will halve India’s import tariffs on British whisky and gin from 150% to 75%, with a phased reduction to 40% by the tenth year of implementation.  

The UK government announced that the deal also covers reduced import duties on other goods such as cosmetics, medical devices, cars, airplane parts, and lamb. 

The Scotch Whisky Association described the agreement as a “once-in-a-generation deal and a landmark moment” for the spirits industry.  

Chief Executive Mark Kent stated that the tariff reduction could drive a fivefold increase in Scotch whisky exports to India over the next five years, generating up to £1 billion (US$1.33 billion) in additional export value and creating around 1,200 jobs across the UK. 

British Prime Minister Keir Starmer hailed the deal as the most ambitious trade agreement India has signed to date and the most significant the UK has completed since exiting the European Union.  

“This is the biggest trade deal that we the UK have done since we left the EU,” Starmer said. 

India’s Trade Ministry noted that 99% of Indian exports under the agreement will now enter the UK without import duties. These include key sectors such as textiles, marine products, leather goods, footwear, toys, gems, and jewelry.  

Indian Trade Minister Piyush Goyal emphasized that the deal strengthens India’s position in global value chains and supports the country’s ambition to become a global economic powerhouse. 

In addition to tariff cuts, the agreement includes social security exemptions for certain workers. Employees temporarily transferred between India and the UK will be exempt from paying social security contributions in the host country for up to three years.  

This provision, which India’s government described as “an unprecedented achievement,” ensures that contributions will only be paid in the home country. 

Britain currently has similar reciprocal agreements with 17 countries, including the EU, the US, and South Korea. 

The UK government projects the deal will increase annual bilateral trade by £25.5 billion (US$34 billion) by 2040 and contribute nearly £5 billion (US$6.7 billion) a year to the British economy. 

India is currently the world’s fifth-largest economy and is expected to become the third-largest in the coming years.  

The UK ranks sixth globally and has identified India as a priority market in its long-term export strategy. 

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